Judge: Joseph Lipner, Case: 24STCV24366, Date: 2025-05-14 Tentative Ruling
Case Number: 24STCV24366 Hearing Date: May 14, 2025 Dept: 72
SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES
DEPARTMENT 72
TENTATIVE
RULING
|
CREDITORS ADJUSTMENT BUREAU, INC.,
Plaintiff, v. BORN ACTIVE LLC, Defendant. |
Case No:
24STCV24366 Hearing Date: May 14, 2025 Calendar Number: 15 |
Plaintiff Creditors Adjustment Bureau, Inc. (“Plaintiff”)
seeks default judgment against Defendants Born Active LLC dba Puroclean of
Victor Heights; (“Born Active”) and Bidrestore Consulting LLC dba Puroclean of
Victor Heights (“Bidrestore”) (collectively, “Defendants”).
Plaintiff requests:
(1) money judgment in the amount of $53,860.85, consisting
of:
(a)
damages in the amount of $50,447.28, including:
(i)
$16,815.76 in base damages, and
(ii)
$33,631.52 in treble damages;
(b) prejudgment interest in the
amount of $1,744.62;
(c) costs in the amount of $774.48;
and
(d) attorney’s fees in the amount
of $894.47.
The Court is prepared to enter default judgment for the base
damages, plus Plaintiff’s interest, costs, and fees. If Plaintiff wishes to
seek treble damages, Plaintiff must amend the Complaint to (1) attach the
underlying contracts or allege their terms verbatim; (2) allege the dollar
amount of treble damages sought; and (3) allege facts showing that three audit
request letters were sent to Defendants regarding each of the underlying
insurance policies. Plaintiff must re-serve any amended complaint and seek
entry of default on it.
This is a debt collection action arising out of two workers
compensation insurance policy agreements. The insurance policies underlying
this action were issued by State Compensation Insurance Fund (“State Fund”). State
Fund has assigned its right to sue to Plaintiff with full right to file a legal
action in the name of Plaintiff.
State
Fund and Defendants entered into two insurance policy agreements Policy No.
9316224-22 (covering the period of April 14, 2022 through April 14, 2023) (the
“2022 Policy”) and Policy No. 9316224-23 (covering the period of April 14, 2023
through August 25, 2023) (the “2023 Policy”) (together, the “Policies”).
Plaintiff
alleges that Defendants breached the 2022 Policy by failing to make the
required payment of the premium assessed by State Fund at the conclusion of the
policy. Plaintiff alleges that Defendants breached the 2023 Policy by failing
to make the required payment of the premium assessed by State Fund at the
conclusion of the policy.
Plaintiff
alleges that Defendants failed to provide comply with audit requests made by State
Fund with respect to each of the Policies.
Plaintiff
filed this action on September 19, 2024, raising claims for (1) breach of
contract; (2) open book account; (3) account stated; and (4) reasonable value.
Default
was entered against Defendants on February 26, 2025.
Code of Civil Procedure, section 585 permits entry of a
judgment after a Defendant has failed to timely answer after being properly
served. A party seeking judgment on the default by the Court must file a Form
CIV-100 Request for Court Judgment, and:
(1) Proof of service of the complaint and summons;
(2) A dismissal of
all parties against whom judgment is not sought (including Doe defendants) or
an application for separate judgment under CCP § 579, supported by a showing of
grounds for each judgment (CRC 3.1800(a)(7));
(3) A declaration
of non-military status as to the defendant (typically included in Form CIV-100)
(CRC 3.1800(a)(5));
(4) A brief summary of the case (CRC 3.1800(a)(1));
(5) Admissible
evidence supporting a prima facie case for the damages or other relief
requested (Johnson v. Stanhiser (1999)
72 Cal.App.4th 357, 361-362);
(6) Interest computations as necessary (CRC 3.1800(a)(3));
(7) A memorandum of
costs and disbursements (typically included in Form CIV-100 (CRC 3.1800(a)(4));
(8) A request for
attorney’s fees if allowed by statute or by the agreement of the parties (CRC
3.1800(a)(9)), accompanied by a declaration stating that the fees were
calculated in accordance with the fee schedule as per Local Rule 3.214. Where a request for attorney fees is based on
a contractual provision the specific provision must be cited; (Local Rule
3.207); and
(9) A proposed form
of judgment (CRC 3.1800(a)(6));
(10) Where an
application for default judgment is based upon a written obligation to pay
money, the original written agreement should be submitted for cancellation (CRC
3.1806). A trial court may exercise its discretion to accept a copy where the
original document was lost or destroyed by ordering the clerk to cancel the
copy instead (Kahn v. Lasorda's Dugout, Inc. (2003) 109 Cal.App.4th
1118, 1124);
(11) Where the
plaintiff seeks damages for personal injury or wrongful death, they must serve
a statement of damages on the defendant in the same manner as a summons (Code
Civ. Proc. § 425.11, subd. (c), (d)).
(California Rules of Court, rule
3.1800.)
Pursuant to Code Civ. Proc., § 1033.5(a)(1), items are
allowable as costs under Section 1032 if they are “filing, motion, and jury
fees.”
A party who defaults only admits facts that are well-pleaded
in the complaint or cross-complaint. (Molen v. Friedman (1998) 64
Cal.App.4th 1149, 1153-1154.) Thus, the complaint must state a claim for the
requested relief.
According
to the proof of service filed on January 10, 2025, Born Active was served on
January 7, 2025 at 1401 21st Street, Sacramento, CA 95811 via substituted
service on Registered Agents Inc., Born Active’s agent for service of process,
Bill Havre authorized to accept.
According
to the proof of service filed on January 24, 2025, Bidrestore was served on
January 11, 2025 at 2025 Tracy Lane, Alhambra, California 91803 via personal
service on Ebipade Charles Omajuwa, registered agent for service of process.
The Doe defendants were dismissed from the action on April
11, 2025, pursuant to Plaintiff’s request.
Plaintiff has filed a form CIV-100 seeking default judgment.
George V. Aposhian avers to Defendants’ non-military status.
Plaintiff provides a brief summary of the case in the
declaration of Alexis Inniss.
If a breach of contract claim “is based on alleged breach of
a written contract, the terms must be set out verbatim in the body of the
complaint or a copy of the written agreement must be attached and incorporated
by reference.” (Harris v. Rudin, Richman
& Appel (1999) 74 Cal.App.4th 299, 307.)
Plaintiff has not provided copies of the underlying
insurance contracts or set forth their terms verbatim in the Complaint. If
Plaintiff seeks recovery on the breach of contract claim (which is Plaintiff’s
only claim for treble damages), Plaintiff must amend the complaint to address
this defect, re-serve the complaint on Defendants, and seek entry of default
and default judgment on the amended complaint.
“Code of Civil Procedure section 580 prohibits the entry of
a default judgment in an amount in excess of that demanded in the complaint.” (Kim v. Westmoore Partners, Inc. (2011)
201 Cal.App.4th 267, 286.) Moreover, “a statement of damages cannot be relied
upon to establish a plaintiff's monetary damages, except in cases of personal
injury or wrongful death.” (Ibid.) “In all other cases, when recovering
damages in a default judgment, the plaintiff is limited to the damages
specified in the complaint.” (Ibid.) Moreover, a plaintiff must submit admissible
evidence supporting a prima facie case for the damages or other relief
requested (Johnson v. Stanhiser (1999)
72 Cal.App.4th 357, 361-362.)
Alexis
Inniss, State Fund’s Credit and Collections Specialist, declares that
Defendants owe a total of $16,815.76 in insurance premiums and attaches
invoices reflecting the amounts owed. (Inniss Decl. ¶¶ 4, 6, Ex. 1, 2.)
Plaintiff has adequately evidenced its base damages for the
unpaid premiums.
“If
an employer fails to provide for access by the insurer or its authorized
representative to its records, to enable the insurer to perform an audit to
determine the remuneration earned by the employer’s employees and by any of its
uninsured subcontractors and the employees of any of its uninsured
subcontractors during the policy period, the employer shall be liable to pay to
the insurer a total premium for the policy equal to three times the insurer’s
then-current estimate of the annual premium on the expiration date of the
policy. The employer shall also be liable, in addition to the premium, for
costs incurred by the insurer in its attempts to perform an audit, after the
insured has failed upon the insurer’s third request during at least a 90-day
period to provide access, and the insured has provided no compelling business
reason for the failure. This section shall only apply if the insurer elects to
comply with the conditions set forth in subdivision (d).” (Ins. Code, §
11760.1, subd. (a).)
“Upon
the employer’s failure to provide access after the insurer’s third request
during at least a 90-day period, the insurer may notify the employer through
its mailing of a certified, return-receipt, document of the increased premium
and the total amount of the costs incurred by the insurer for its attempts to
perform an audit as described under subdivision (a). Upon the expiration of 30
days after the delivery of the notice, collection by the insurer of the amount
of premium and costs described under subdivision (a), less all premiums
previously paid by the employer for the policy, shall be fully enforceable and
executable.” (Ins. Code, § 11760.1, subd. (d).)
Plaintiff
requests treble damages in the amount of $33,631.52. (Aposhian Decl. ¶ 6.)
There
are several problems with Plaintiff’s request for treble damages.
First, as discussed above, Plaintiff has not attached the
underlying insurance contracts for its breach of contract claim, which is the
only claim for which it seeks treble damages.
Second,
Plaintiff does not set forth the amount of treble damages in the Complaint.
Rather, Plaintiff demands “[t]reble damages in an amount equal to three (3)
times the then-current estimate of the annual premium” for the Policies.
(Complaint at 6:20-22.) This is not sufficient to apprise Defendants of the
amount of damages sought against them. Plaintiff’s complaint must demand the
dollar amount of treble damages that it seeks. (Kim v. Westmoore Partners,
Inc., supra, 201
Cal.App.4th at p. 286.)
Third,
the Complaint does not adequately allege that State Fund made three requests
for audit information for each policy.
The Complaint conclusorily alleges that Plaintiff or State
Fund made at least three requests over a 90-day period. (Complaint ¶ 18.) The
Complaint provides no further facts on this issue.
Concerningly, the Inniss declaration appears to suggest that
only two request letters were sent for each policy. Inniss declares that
request letters for the 2022 Policy were sent on December 28, 2023 and January
11, 2024. (Inniss Decl. ¶ 7, Ex. 3, 4.) Inniss declares that request letters
were sent on September 1, 2023 and September 15, 2023. (Inniss Decl. ¶ 8, Ex.
4, 5.) No further request letters are indicated.
On May 17, 2024, Plaintiff sent Defendants a letter
notifying them of their alleged liability for the increased premium. (Complaint
¶ 19; Aposhian Decl. ¶ 6, Ex. 2.)
The Court does not find that Plaintiff has made a showing
that Plaintiff or State Fund sent defendants three letters requesting the audit
information, as required by section 11760.1 to trigger the entitlement to
treble damages.
If Plaintiff wishes to seek treble damages, Plaintiff must
amend the complaint to address these defects, re-serve the complaint on
Defendants, and seek entry of default and default judgment on the amended
complaint. Otherwise, the Court is prepared to enter default judgment for the
base damages, plus Plaintiff’s interest, costs, and fees.
“(a) A person who is entitled to recover damages certain, or
capable of being made certain by calculation, and the right to recover which is
vested in the person upon a particular day, is entitled also to recover
interest thereon from that day, except when the debtor is prevented by law, or
by the act of the creditor from paying the debt. This section is applicable to
recovery of damages and interest from any debtor, including the state or any
county, city, city and county, municipal corporation, public district, public
agency, or any political subdivision of the state.
(b) Every person who is entitled under any judgment to
receive damages based upon a cause of action in contract where the claim was
unliquidated, may also recover interest thereon from a date prior to the entry
of judgment as the court may, in its discretion, fix, but in no event earlier
than the date the action was filed.”
(Civ. Code, § 3287.)
“(a) Any legal rate of interest stipulated by a contract
remains chargeable after a breach thereof, as before, until the contract is
superseded by a verdict or other new obligation.
(b) If a contract entered into after January 1, 1986, does
not stipulate a legal rate of interest, the obligation shall bear interest at a
rate of 10 percent per annum after a breach.”
(Civ. Code, § 3289.)
The Complaint requests interest on the unpaid premiums at a
rate of 10 percent per annum. (Complaint at 6:16-7:1.) The amount of principal
damages can be made certain because it results entirely from the premiums owed
under the Policies.
George V. Aposhian provides the interest computations in his
declaration. (Aposhian Decl. ¶ 5.) These calculations are based only on the
base premiums, and not the treble damages.
Plaintiff has adequately shown its interest.
Plaintiff includes a memorandum of costs in the submitted
Form CIV-100. George V. Aposhian avers that Plaintiff expended $774.48 in
costs.
Plaintiff
requests $894.47 in attorney’s fees.
This is an action on a contract. Plaintiff’s base damages
are $16,815.76. Where the judgment is between $10,000.01 and $50,000.00, the
maximum attorney fee is equal to $690 plus 3% of the excess over $10,000. (Local
Rule 3.214.) This amount is equal to $894.47. Plaintiff’s request is therefore
proper.
Plaintiff
has submitted a proposed form of judgment.
California
Rule of Court 3.1806 states that “unless otherwise ordered” judgment upon a
written obligation to pay money requires a clerk’s note across the face of the
writing that there has been a judgment. Here, Plaintiff has not submitted the
original documents. The Court does not discern any practical need for such a
clerk’s note on the written obligation in the current case and therefore orders
that it need not be included. If this causes any issues for any party or
non-party, they are authorized to bring the matter to the Court’s
attention.
Plaintiff does not need to submit a statement of damages
because this is not a personal injury or wrongful death case.